SEC3 Compliance is monitoring the SEC’s proposal to rescind Advisers Act Rule 206(4)-5, commonly known as the “pay-to-play” rule. If adopted, the proposal would eliminate the rule’s prescriptive political contribution restrictions and give investment advisers greater flexibility to address pay-to-play risks through their broader compliance programs.
On September 3, 2026, the SEC proposed rescinding Rule 206(4)-5 in its entirety.
The rule, adopted in 2010, generally prohibits an investment adviser from receiving compensation for providing advisory services to a state or local government entity for two years after the adviser or certain “covered associates” make political contributions to officials who
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